Retail
Wal-Mart Online Sales Remain Tiny Fraction of Revenue
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Wal-Mart Stores Inc. (NYSE: WMT) has launched another free shipping program ahead of Amazon.com Inc.’s (NASDAQ: AMZN) Prime special. The Amazon “Prime Day” event, on July 12, is meant to spike the sales of America’s largest e-commerce company and add millions of people to its Prime service, which costs $10.99 a month. Alternatively, the new Wal-Mart five-day free shipping deal starts on July 12 and eliminates all shipping costs for items bought at Walmart.com.
The plan can’t help it make a dent in Amazon’s success or increase Wal-Mart’s e-commerce sales enough to help its slowing brick-and-mortar growth. Wal-Mart’s online sales are only about 7% of the U.S. revenue of the world’s largest retailer. That 7% is not close to adequate to save Wal-Mart from slow comparable store U.S. sales, which have risen only about 1% over the past year.
Wal-Mart’s mistake as it tries to make up ground on Amazon is that it merely imitates the e-commerce company’s activity. And worse, Amazon remains far ahead in areas that include streaming video. Wal-Mart will need to take a radical approach to dent the juggernaut pace of its rival.
Wal-Mart does not have an anchor program like Prime, which offers services well beyond free shipping and special prices. Prime’s benefits do not only include more music and free online storage. Amazon also has its own consumer electronics, such as Fire and Amazon TV. The e-commerce company has pushed itself far into its users’ everyday lives.
For Wal-Mart to approach the success of Amazon on its own, it would need to form a content partnership with Netflix or Apple TV to drive a video service. And it would need consumer electronics partnerships with companies like Dell and Sony. Without partnerships like these, Walmart.com is merely an online store like those of smaller brick-and-mortar retailers.
For the time being, Wal-Mart is stuck in the online past, and it has made up almost no ground on Amazon.
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